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Fair Isaac's risk/reward is starting to look enticing at current levels. If it reaches about $75 of EPS by 2029 and trades at 20x earnings, that implies a stock price of about $1,500. x.comÂ
FICO still looks like one of the best opportunities right now, based on estimated EPS growth of 18% a year and a terminal P/E of 25. x.comÂ
Fair Isaac is still overpriced at 19x earnings even after falling 60% this year. Never overpay. x.comÂ
FICO's data moat should widen against VantageScore as it leverages AI, making it an easy decision. Fair Isaac holds about 130 AI patents, per its earnings report. @VJNCapital argues the thesis rests on pricing: a few dollars for a score matter little against a $300k-$500k mortgage, and what counts is how accurately each model predicts default risk; decades of model iterations should be hard to compete against. x.com x.comÂ
FICO is trading at its lowest valuation of the decade, about 13x forward earnings for what is essentially a duopoly, which is attractive. @thejmkane counters that it is no longer really a monopoly, but a duopoly at 13x is not so bad. x.com x.comÂ
FICO's moat is starting to get disrupted, and the premium multiple holders once defended has not held up. Two years ago the stock traded at 80x EPS on the argument that a high-quality compounder with a moat deserved it; that multiple has since compressed by about 80%. FICO would need to rise 280% to regain its all-time high, and there is a good chance it never does. x.com x.com x.comÂ
Fair Isaac's moat has narrowed but not disappeared, so the selloff over VantageScore may be an opportunity. FHFA Director Bill Pulte let all Fannie Mae and Freddie Mac lenders use VantageScore 4.0, ending FICO's effective mortgage monopoly, and floated a cheaper bi-merge model. That brings a lower-cost rival and threatens pricing power. But FICO is deeply embedded in lender systems, underwriting, securitizations and decades of data. It works only if valuation leaves a margin of safety. x.comÂ
Fair Isaac, S&P Global, Moody's and MSCI are among the best businesses on the planet, amazing to hold for the long term and to beat the market. x.comÂ
Fair Isaac still looks far too expensive at 90x free cash flow, even after a 75% fall in a monopoly. Even if FCF doubled, the price would equal 45 years of cash flow, and doubling at FICO's size is much less plausible after it raised prices 17 times and angered customers. The test is whether the company can earn the price paid within an investor's lifetime under generous growth assumptions. x.com x.com x.com x.comÂ
Fair Isaac looks insanely cheap at its lowest P/E in well over a decade, with fundamentals that still look beautiful. Per @stock_analysisx, the derating follows the US government's move to end FICO's mortgage scoring monopoly, leaving the stock at its lowest P/E since 2013. x.com x.comÂ